Job market shows signs of recovery after "grim" 2025

Experts have predicted the U.S. labor market will show signs of moderate improvement ahead of the December jobs report release on Friday morning.

Data points leading up to the report have been all over the map. Data published by outplacement firm Challenger, Gray & Christmas on Thursday revealed that job cut announcements by employers fell sharply in December, but only after they hit their highest level since the beginning of the pandemic.

Andy Challenger, chief revenue officer and workplace expert with the firm, said the latest news on layoffs is encouraging.

“Just about 35,000 job cuts [were] announced by U.S. employers in December,” he said. “That’s about 8% less than the same month last year.”

Companies do tend to hold off on layoffs during the holidays. But they didn’t hold off on hiring, said Amy Glaser, Adecco senior vice president.

"Hiring plans were the highest for the month of December in three years,” she said. “I’m seeing that on the ground — we’re seeing employers hiring through the end of December into January.”

In 2025, hiring stagnated, unemployment rose, and it got much harder to find a new job once laid off. And a lot of people got laid off, Challenger said.

“The last quarter of the year was the highest number of job cuts since the 2008 recession,” he said.

Some of that is a hangover from the tech and e-commerce hiring boom during the pandemic, Columbia Business School associate professor Daniel Keum said.

“They hired a lot of people,” he said. “Once you hire them, finding out whether they’re the right fit, do we need them — that takes about two or three years. So, 2025 was finally the year when a lot of companies were, ‘OK, we finally got through the pandemic over-hire.’”

Boston College professor and economist Brian Bethune chalked up 2025’s anemic job creation to the shock of President Donald Trump’s tariffs.

“In that environment, the gut reaction of business is to stop hiring,” he said.

Now, he said most businesses have adjusted to the tariff shock and are ready to start hiring again — but cautiously, because there’s still plenty of economic uncertainty out there.